The three major privacy chains have raised over $1 billion: Why are institutions collectively betting on the "invisible blockchain"?

In May 2026, the crypto industry entered a new round of intensive fundraising with a clear structural direction and well-defined targets. Three institutional-focused privacy blockchains—Arc launched by Circle, Canton developed by Digital Asset, and Tempo co-incubated by Stripe and Paradigm—completed a combined funding of over $1 billion between October 2025 and May 2026, with a total valuation exceeding $10 billion. Investors included top organizations from both traditional finance and crypto, such as BlackRock, Goldman Sachs, a16z, Stripe, Paradigm, Intercontinental Exchange, Nasdaq, and S&P Global.

In a blog post dated May 12, 2026, Matt Hougan, Bitwise’s Chief Investment Officer, offered a judgment on this fundraising surge: privacy could become the next “killer app” for cryptocurrencies. He noted that on today’s public chains, enterprise transactions are broadcast to the outside world before completion, and employee salaries can be viewed by anyone via block explorers. For institutions, that kind of transparency is “a vulnerability, not a feature.”

The industry background behind this view is that the fully transparent ledger design of mainstream public chains such as Ethereum is becoming a key obstacle to the large-scale entry of institutional capital.

Triple Momentum: Regulatory Breakthrough, Technological Maturity, and Key Nodes

This fundraising wave is not an isolated event, but the result of multiple trends overlapping.

On the regulatory front, on July 18, 2025, the U.S. President signed the “Guiding and Establishing National Innovation for US Stablecoins Act” (GENIUS Act), establishing the first comprehensive federal regulatory framework for payment stablecoins. It clarified the issuing entities and reserve requirements for compliant stablecoins. The bill previously passed the Senate on June 17, 2025, with a vote of 68 to 30, and passed the House on July 17, 2025, with 308 to 122.

On the technological accumulation side, privacy technologies such as zero-knowledge proofs, trusted execution environments, and selective information disclosure have matured, moving “verifiable privacy” from theory into engineering implementation. In May 2026, GoDark used zero-knowledge proofs on Solana to build dark pool infrastructure; Deluthium also deployed an institutional-grade dark pool execution layer on Arbitrum.

Key event timeline:

In October 2025, Tempo completed a $500 million Series A funding at a $5 billion valuation, led by Greenoaks and Thrive Capital, with Sequoia Capital participating. In the same month, Arc launched on its public testnet, with more than 100 participating institutions.

In December 2025, Digital Asset, the developer of Canton, completed a $50 million funding round.

In January 2026, Goldman Sachs released an institutional survey report: 35% of institutions view regulatory uncertainty as the biggest obstacle to adopting crypto assets, and 32% believe regulatory clarity is the top catalyst.

In February 2026, multiple large financial institutions completed their first cross-border intraday repurchase agreement through the Canton Network, using tokenized UK government bonds for settlement.

On March 18, 2026, Tempo’s mainnet officially went live, and it simultaneously released the Machine Payment Protocol (MPP).

On March 23, 2026, Visa was approved to become a super validation node on the Canton Network, receiving the highest weight of 10.

On April 30, 2026, Visa expanded the stablecoin settlement pilot to nine blockchains, adding Arc, Canton, Tempo, Base, and Polygon. The annualized settlement run rate had already reached $7 billion.

On May 11, 2026, Circle announced the completion of Arc token pre-sale, raising $222 million, with a fully diluted valuation of $3 billion. a16z led $75 million. On the same day, Bloomberg reported that Digital Asset was raising about $300 million at an approximately $2 billion valuation, with a16z crypto leading the round.

On May 12, 2026, Bitwise CIO Matt Hougan published a blog post positioning privacy as the next “killer app” for the crypto industry.

Three Paths: Configurable Privacy, Default Privacy, and Permissioned Consensus

The three funding rounds are similar in size, and the investors overlap heavily, but the technical routes, target customers, and privacy implementation methods of the three chains differ significantly.

Arc: An Economic Operating System Powered by Stablecoins

Arc is launched by stablecoin issuer Circle and is positioned as an “economic operating system.” Its core design features USDC as the native Gas token, sub-second finality, configurable privacy, and EVM compatibility. In an internal memo, a16z partners Ali Yahya and Noah Levine wrote: “Only a few blockchains will become the new backbone of the financial system,” and Arc has favorable conditions to be one of them.

Arc’s privacy solution uses a “configurable privacy” model: institutions can independently choose to reveal or hide data based on the type of transaction, rather than an all-or-nothing approach. In its tokenomics design, 60% of ARC tokens are allocated to network builders and participants, while Circle holds 25% for operating validator infrastructure.

Arc’s investor composition directly reflects Circle’s strategic intent—traditional financial infrastructure institutions such as BlackRock, Intercontinental Exchange, Apollo Fund, SBI Group, Janus Henderson, and Standard Chartered Ventures are involved, indicating Arc’s core goal is to deeply embed USDC into institutional settlement, asset management, and payment systems.

Canton: A Privacy Collaboration Network for Financial Institutions

Canton is developed by Digital Asset, and among the three chains it has the longest track record of collaboration among financial institutions. Its collaboration list includes Goldman Sachs, DRW, Citadel Securities, DTCC, Tradeweb, Bank of New York Mellon, Nasdaq, and S&P Global. As of May 2026, Canton Network has processed more than $6 trillion in tokenized assets.

Canton’s technical core is the open-source smart contract language Daml. Its privacy logic is clearly distinct from Ethereum: transactions are private by default, and data is accessible only to authorized parties. This “default privacy” design directly responds to compliance requirements—banks have legal obligations to protect customer information and cannot accept broadcasting transaction data in real time to the entire network. In February 2026, Canton completed its first cross-border intraday repurchase agreement on the network, using tokenized UK government bonds for settlement, with a market size of about $2 trillion involved.

Canton’s positioning is closer to a “privacy collaboration layer between financial institutions,” targeting banks, clearinghouses, and trading platforms that already occupy key positions in traditional financial infrastructure. Its funding cadence also reflects this: it raised $135 million in June 2025 and another $50 million in December 2025. The roughly $300 million funding round reported by Bloomberg in May 2026 pushed the valuation to about $2 billion.

Tempo: A High-Performance Closed Architecture for the Payments Track

Tempo is co-incubated by Stripe and Paradigm. In October 2025, it completed a $500 million Series A funding at a $5 billion valuation. Its technical path is completely different from Arc and Canton: it is a Layer 1 public chain forked from Ethereum and deeply optimized for fintech applications, using a private permissioned consensus mechanism called Simplex BFT.

Tempo’s core innovations include: allowing Gas fees to be paid with any stablecoin and automatically exchanged through an integrated AMM; a low-cost, predictable fee structure targeting less than $0.001 per transfer; native smart accounts supporting batch payments, Gas sponsorship, and scheduled transactions. Tempo’s design philosophy is summarized as “the Apple of payment blockchains”—achieving an optimal user experience and business efficiency through vertical integration and a closed architecture.

In April 2026, Tempo announced a partnership with DoorDash to provide global payment services for merchants and delivery personnel. Its target scenarios include cross-border payments, foreign exchange settlement, and enterprise treasury management—scenarios that have almost zero tolerance for fully transparent ledgers of the Ethereum type. Tempo went live on March 18, 2026.

Below is a comparison of key data across the three chains:

The Pain of Transparency: When Public Ledgers Become Business Vulnerabilities

Institutional demand for privacy chains is not a matter of ideology, but an operational survival condition. This can be understood at three levels.

At the transaction execution layer: on fully transparent public chains such as Ethereum, every pending transaction is broadcast in the mempool, allowing anyone to observe it and front-run. This provides a natural breeding ground for MEV attacks (front-running transactions and sandwich attacks). Based on verifiable research data, Ethereum users have cumulatively lost more than $1.3 billion to MEV-related attacks. In front of institutions executing large transactions, the cost of such transparency escalates from an implicit tax into a structural risk—competitors can front-run with precision down to the millisecond before transaction finalization.

At the level of business secrets: a transparent blockchain ledger means all transaction records remain permanently public. Enterprise supply chain payment amounts, partner identities, fund dispatch schedules, and payroll disbursement records are all freely accessible to competitors, regulators, and the public via block explorers. Bitwise CIO Hougan offers a sharp metaphor: anyone can see how much you earn, who you receive it from, and when the money arrives. For enterprises, this is not only a privacy violation, but a systemic leak of competitive intelligence.

At the level of compliance obligations: regulated financial institutions such as banks have statutory obligations to protect customer information. Uploading transaction data to a public blockchain is equivalent to making protected information publicly available in real time to all network participants, including competitors and foreign regulators. This is precisely the fundamental reason Canton chose the “default privacy” architecture.

Goldman Sachs’ institutional survey data from January 2026 provides quantitative support for the above judgment: 35% of institutions list regulatory uncertainty as the biggest obstacle to adopting crypto assets, and 32% view regulatory clarity as the primary catalyst. This data indicates that privacy is not only a technical issue, but also an institutional and regulatory one. With the formal signing of the GENIUS Act in July 2025, the premise for building compliance infrastructure is being established.

Clash of Views: Support, Compromise, and Doubts

Around this privacy-chain fundraising wave, the market formed three groups of interconnected discussions.

Supporters: Privacy is the foundational infrastructure for institutional finance on-chain

Matt Hougan’s remarks are the most representative. In his blog post on May 12, 2026, he explicitly positions privacy as a “killer app” that drives the crypto industry into the next stage of mainstream adoption. He pointed out that the current public chains’ structural trade-offs among speed, cost, and privacy have become the fundamental barrier to institutional adoption. He also mentioned that the passage of the GENIUS Act opened the gate for institutional capital to enter, and that all three enterprise-level blockchain fundraising rounds occurred after that.

In this fundraising round, a16z co-led both Arc and Canton investments, with a single-investment commitment of $75 million for Arc. This behavior of continuous top-ups itself is a clear market signal: privacy is not an ideological demand of crypto purists, but a high-speed highway that must be built when traditional financial infrastructure players enter the space.

Moderates: Privacy should be configurable, not all-or-nothing

At the level of industry practice, a consensus that is taking shape is “programmable privacy.” In April 2026, Ran Goldi of Fireblocks said that the privacy issues of stablecoins are the main obstacle to institutional adoption, and that the industry trend is moving toward enabling users to independently choose a balance between transparency and confidentiality. This view aligns with Arc’s “configurable privacy” design: institutions decide the scope of data visibility based on different transaction types, rather than making a binary choice between full transparency and complete anonymity.

The Ethereum ecosystem is also actively responding to this demand. The PSE team of the Ethereum Foundation released a roadmap to move from a “fully transparent ledger” toward “programmable privacy,” aiming to introduce selective privacy capabilities while maintaining openness of the public chain through technologies such as stealth addresses, PlasmaFold, and zkTLS.

Skeptics: Closed architectures sacrifice the core value of blockchains

Tempo’s permissioned consensus and closed architecture have sparked clear controversy. When Stripe and Paradigm first published Tempo in September 2025, many industry participants questioned its “Web2 giants building their own public chain” model, arguing that it diverges from decentralization ideals.

In addition, the discussion around the potential liquidity fragmentation that privacy chains may cause remains a persistent focus. If a large volume of institutional transactions migrates from public chains such as Ethereum to dedicated privacy networks, the crypto market’s price discovery mechanism could be challenged. When a significant portion of trading volume shifts to opaque venues, price discovery may become fragmented, affecting overall market stability.

Far-Reaching Impact: Capital Reconfiguration and Reshaping of the Industry Landscape

The short-term impact of this fundraising wave is already beginning to show, but the longer-term structural changes are even more worthy of attention.

Short-term impact: Capital reallocation. With total fundraising exceeding $1 billion across the three privacy chains, the scale stands out particularly against the backdrop of a generally sluggish crypto venture environment. It marks a shift of capital from an “arms race in public chain infrastructure” toward “vertical infrastructure for specific use cases.” In 2026, a16z raised $2.2 billion for its latest crypto fund and chose to make continuous moves in the privacy chain track. This pattern of capital allocation itself may change where industry resources flow.

Mid-term impact: The momentum of infrastructure-layering is accelerating. The crypto industry is forming a “two-layer structure”: one layer is open public chains oriented to retail users and DeFi protocols (such as Ethereum and Solana), and the other layer is privacy chains oriented to institutional users. Visa incorporating nine blockchains into the stablecoin settlement pilot indicates that institutional payment infrastructure is integrating across the boundary between public and private chains.

The following summarizes participation by different institutions in the privacy chain ecosystem:

Long-term impact: Privacy standards may redefine industry entry thresholds. If “verifiable privacy” becomes a factual standard for institutional-chain financial use, infrastructure that cannot provide privacy capabilities may be downgraded—shifting from being a potential financial backbone to a “public experimental platform.” However, this trend also contains risks: the centralization of privacy capabilities could spawn new centralized power structures, and the insufficient decentralization of permissioned consensus may become an area regulators continue to watch.

Conclusion

The privacy-chain fundraising wave from October 2025 to May 2026 signals that the crypto industry has entered a new growth phase. The characteristic of this phase is no longer the grand narrative of “blockchain will disrupt traditional finance,” but rather the pragmatic question: “What functions must blockchain add for it to truly integrate into the financial system?” The answers are gradually unfolding across three chains: configurable privacy, default privacy, and permissioned consensus. Each of the three paths is exploring different possibilities for institutional finance on-chain.

Transparency was once blockchain’s most celebrated feature. But when traditional finance giants start seriously considering moving their core businesses onto the chain, their first requirement is precisely to hide things that should not be visible to everyone. The emergence of this demand is not a denial of blockchain’s spirit; it is the maturation process technology must undergo as it moves from an experimental environment to a production environment. The real test is not the size of the fundraising numbers, but the real adoption after the mainnet goes live—that is the final battleground for whether the privacy-chain narrative can be delivered.